The rising popularity of wearable technology in Australia hit domestic tablet sales in 2014, according to new research by industry analyst firm Telsyte.

The Telsyte Australian Media Tablet Market Study 2015 reveals that tablet sales in Australia dropped by 20 percent in 2014, as a cyclical slowdown hit the market during the year.

Telsyte believes the slowing demand was influenced by increased demand in a range of wearable devices, the release of the new iPhone 6 and larger-screen Android phones, and a market saturation of Apple iPad and Android tablet devices in Australia.

According to Telsyte, only Windows tablets saw a year-on-year increase in unit sales, amid growing consumer interest in smart wristbands and smartwatches during the same period.

The company said Windows tablets may be the primary force behind any possible return to form for the market in 2015, with Windows-based PC users looking to upgrade to convertible or hybrid devices letting them run PC applications on a tablet device.

While Windows tablets represent a potential boost in sales this year, Apple made up nearly half of all tablet unit sales in the six months from July 1 to December 31, reclaiming its market leader position in the local market during the second half.

This is despite Apple's latest sales data suggesting that the peak for iPad sales may have already been and gone, with sales seemingly on a steady decline, following in the footsteps of the company's iPod product range.

According to Apple's sales data for the previous few years, its iPad devices saw a spike in sales in the first quarter of 2013, then again in the first quarter of 2014. However, the 2015 first-quarter figures fell short of the previous two corresponding periods.

This loosely mirrors Telsyte's findings, which suggest that nearly half of Australians who have ever purchased a tablet did so in 2013, with few finding a reason to upgrade their device in 2014. The firm estimates that at the end of 2014, around 13 million Australians, or more than half the population, had access to a tablet.

Telsyte senior analyst Alvin Lee said that low-cost tablets purchased as gifts have lost their appeal, with people now looking towards wearable devices as presents, or to fulfil gadget-buying urges.

"The average cost of a smart fitness band is similar to an entry-level tablet, making it a popular alternative purchase for those who already own a tablet," Lee said.

The downward tablet trend may continue, according to Telsyte, with wearable devices such as Microsoft's HoloLens and Samsung's Gear VR also set to challenge the role of tablets in a connected-home environment.

"In the coming years, we are likely to see more connected-home apps being developed for wearable devices such as virtual- or augmented-reality headsets," said Lee.

Telsyte's findings follow estimates released in January by industry analysis company IDC indicating that the global tablet market would grow by 7.2 percent in 2014, down from 52.5 percent the previous year.

Thank You

By registering you become a member of the CBS Interactive family of sites and you have read and agree to the Terms of Use, Privacy Policy and Video Services Policy. You agree to receive updates, alerts and promotions from CBS and that CBS may share information about you with our marketing partners so that they may contact you by email or otherwise about their products or services.
You will also receive a complimentary subscription to the ZDNet's Tech Update Today and ZDNet Announcement newsletters. You may unsubscribe from these newsletters at any time.